Weakness persists in late afternoon deals; IT top loser

Tracking sluggish European markets, Indian equity benchmarks remained weak in late afternoon session, as most of the sectoral indices continued to hit by heavy selling pressure. Adding some worries, United Nations report noted that India lost $80 billion from natural disasters in 20 years and also ranks fourth among the top 10 countries that reported economic losses due to disasters. Traders remained worried with Federation of Indian Export Organisations (FIEO) President Ganesh Gupta’s statement that the delay in Goods and Services Tax (GST) refunds is mainly impacting small exporters who provide jobs in labour-intensive sectors. FIEO President made an uproar about pending refunds of Rs 22,000 crore, noting that this is creating liquidity problem for exporters and impacting overseas shipments. Some concerns also came after International Monetary Fund Managing Director Christine Lagarde warned countries of the perils of a trade or a currency war, saying they could be detrimental to global growth and hurt ‘innocent bystanders.’

Traders failed to take any sense of relief with World Bank Official’s statement that an orderly depreciation of the rupee would increase competitiveness and relieve some of the pressures in capital market. The street even overlooked reports that the government will develop a Skill Index to encourage competition between districts and improve their skill development and training performance. On the sectoral front, stocks related to retail companies remained in limelight with FICCI- Deloitte report stating that the Indian retail sector is expected to touch $1,750 billion by 2026, a compounded annual growth rate of 7.8 percent.

On the global front, European markets were trading in red, as the UK economy stagnated in August as the increase in industrial production was offset by a contraction in construction and farm sectors. The Office for National Statistics reported that gross domestic product remained unchanged after expanding 0.4 percent in July. Besides, the UK's merchandise trade deficit widened in August from the previous month and was bigger than economists expected. As per preliminary data from the Office for National Statistics, the visible trade deficit widened to GBP 11.19 billion from GBP 10.38 billion in July. Asian markets were also trading in red, as renewed worries about trade tensions and slowing global growth sent investors fleeing from risky assets.

The BSE Sensex is currently trading at 33977.26, down by 783.63 points or 2.25% after trading in a range of 33723.53 and 34325.18. There were 2 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.98%, while Small cap index was down by 1.33%.

The only gaining sectoral indices on the BSE were Oil & Gas up by 2.49%, Energy up by 0.36%, while IT down by 3.63%, TECK down by 3.37%, Metal down by 3.17%, Realty down by 3.04% and Basic Materials down by 2.65% were the top losing indices on BSE.

The only gainers on the Sensex were ONGC up by 4.27% and Yes Bank up by 3.50%. On the flip side, SBI down by 5.38%, Tata Steel down by 4.92%, Infosys down by 4.43%, Mahindra & Mahindra down by 4.31% and Bharti Airtel down by 3.94% were the top losers.

Meanwhile, raising concern over the issue of slow Goods and Services Tax (GST) refunds, Federation of Indian Export Organisations (FIEO) President Ganesh Gupta has said the delay in refund is mainly impacting small exporters who provide jobs in labour-intensive sectors.

FIEO President made an uproar about pending refunds of Rs 22,000 crore, noting that this is creating liquidity problem for exporters and impacting overseas shipments. He further claimed that refunds of about Rs 7,000 crore are pending on account of integrated GST (IGST) and about Rs 15,000 crore input tax credit (ITC) as of September 30.

Gupta also mentioned that though the refund process has improved in the last six months, the refund can only be claimed after manufacturing of goods and exports with a lead time of about 3-9 months depending on the production cycle. He further pitched for exemption from GST on inputs required for export production to provide necessary competitiveness to exports. The FIEO President also highlighted immediate concern of the export sector with regard to flow of credit from the banking sector, as getting renewal of limits is taking abnormal time with huge documentation requirement.

The CNX Nifty is currently trading at 10206.70, down by 253.40 points or 2.42% after trading in a range of 10138.60 and 10335.95. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were HPCL up by 11.23%, Indian Oil Corporation up by 4.52%, ONGC up by 3.67%, BPCL up by 3.47% and Yes Bank up by 2.78%. On the flip side, Indiabulls Housing Finance down by 8.44%, SBI down by 5.90%, Bajaj Finserv down by 5.72%, Tata Steel down by 5.34% and Infosys down by 5.10% were the top losers.

All Asian markets were trading in red; Nikkei 225 plunged 915.18 points or 4.05% to 22,590.86, Hang Seng decreased 926.70 points or 3.67% to 25,266.37, Taiwan Weighted dropped 660.72 points or 6.74% to 9,806.11, Shanghai Composite dipped 142.38 points or 5.51% to 2,583.46, Jakarta Composite fell 99.37 points or 1.74% to 5,721.30, KOSPI lost 98.94 points or 4.65% to 2,129.67 and Straits Times was down by 80.21 points or 2.63% to 3,051.27.

All European markets were trading in red; UK’s FTSE 100 declined 107.22 points or 1.52% to 7,038.52, France’s CAC decreased 61.82 points or 1.2% to 5,144.40 and Germany’s DAX was down by 100.73 points or 0.87% to 11,611.77.